When markets lurch unexpectedly, it's often tempting to throw out your investing map. That's one way for good investments to get abandoned at the worst possible time.
On Oct. 10, crypto suffered its sharpest flash crash and leverage liquidation event on record after some new tariff-related headlines escalated the trade tensions between the U.S. and China, causing most major assets to fall. XRP (XRP -1.37%) slid hard with the pack before rebounding to reach a loss of just 15%. But it's still very much worth buying and holding for the long term, and here's why.
Image source: Getty Images.
The flash crash had little to do with fundamentals
The catalyst for the crash was the Trump administration's tariff threats, which dented the crypto market during a time of very high use of leverage.
So, when the news dropped, it triggered forced deleveraging and a record liquidation cascade across digital assets. This compromised the liquidity and stability of decentralized exchanges (DEXes) and centralized exchanges (CEXes), knocking coins dramatically lower within just a few minutes. Bitcoin's steep and sudden drop frame this event as a liquidity shock, not a protocol failure specific to XRP or any other chain.
Still, XRP was not spared. Intraday, it fell by about 42% before recovering part of the move as liquidity normalized. But investors need to zoom out here. Whereas price is fickle, the network's utility is steady, and it wasn't compromised at all during the crash or as a result of it.
The chain didn't get overloaded or collapse due to the intense selling volume during the crash, unlike many others that did. Neither the chain's core mechanics nor its target customer set changed during the volatility -- and the institutional investors it's seeking to attract aren't going to be heavily dissuaded by the asset declining in value a bit during a time when many coins fell by 80% or more. A sell-off driven by macro shocks does not rewrite product-market fit.
The market just issued a stress test, and XRP passed it.
There's another silver lining
There's another reason investors should still be looking to buy XRP.
Stablecoins are the fiat currency payment medium for crypto. During the flash crash weekend, at least one prominent stablecoin briefly lost its peg to the underlying fiat currency before recovering. That happened because of unexpected liquidity holes and forced unwinds of leverage requiring vast amounts of capital to change hands very rapidly, not because dollars stopped being dollars.
Ripple's RLUSD (RLUSD -0.11%), the native stablecoin of the XRP Ledger (XRPL), held strong. During the crash, RLUSD traded essentially at $1, exactly the same as always, with routine wiggles measured in tenths of a cent rather than dimes. That's exactly what institutional users want to see: Total stability, even under immense strain.
Institutions prize this sort of predictability. Furthermore, RLUSD's reserve disclosures and custody setup are designed for that audience, and XRPL's native controls give regulatory compliance teams familiar tools if they need them.
That resilience supports the long-term investment thesis for buying the coin.
What should investors do now?
Short-term swings are a feature of this asset class. The right response is to separate perceived risk from real risk.
The narrative says that a big red day means something broke. The reality is that XRP's use case did not change, its chain didn't get clogged or malfunction, and RLUSD's behavior under duress slightly improved the chain's institutional credibility.
XRP will thus probably continue to successfully position itself as a regulatory-compliant, institution-friendly payments and real-world asset (RWA) tokenization platform, and make further inroads to its market. If RLUSD continues to do its job cleanly, demand for block space and native liquidity should grow over time, both of which will support XRP's value.
Buying after a big scare can actually improve long-term outcomes for an investment, provided the reasons to own the asset are still intact. After this weekend, it's clear that they are with XRP.
